This study analyzes the process used in developing the 1977-78 operating budget of the Philadelphia school district. The purpose of the study was to determine what changes are required to assure greater efficiency and effectiveness in resource allocations in the face of increasingly scarce funds available to urban public school systems. Using a questionnaire, the study quizzes administrators on how decisions are made regarding the allocation of available revenue. It concludes that the school district has great difficulty developing a budget that emphasizes education, satisfies the political powers, and is acceptable to employee unions. (Author/LD)